Corporate Board Diversity
As companies are faced with new challenges, it’s increasingly important for them to have a board of click this directors that can identify and address the complexities and opportunities to a variety of information. In addition to racial and gender diversification, boards should include people who are experienced across a variety of sectors and who have various skills backgrounds, knowledge, and perspectives.
Despite the substantial increase in diversity of the boardroom, it is clear that companies have a lot of work to do. According to Spencer Stuart, women and directors from underrepresented racial or ethnic groups account for less than a quarter of board seats at Fortune 500 companies. Similar to this, women and individuals who are of color are not as well represented in leadership positions at the highest levels.
With the spotlight on corporate governance, investors and consumers are urging for greater and more diverse executive and boardrooms. They are increasingly soliciting detailed reports on these indicators, and many are voting with their money by putting pressure on companies to encourage more diverse boards.
Some states have passed legislation to promote diversity on boards. The concept of quotas can be controversial and may give the impression that women and nonwhite directors are picked as “token selections” instead of on their merits. Additionally, they can make it harder to find qualified candidates particularly if the focus is on achieving targets. In many cases, focusing solely on diversity could result in boards that are unfocused and ineffective.
